Raking in the fees for the folk at Cooper

By Christopher Webb

COOPER Investors has turned in a bumper year, reporting no less than a 24 per cent increase in pre-tax earnings to $24 million.

Cripes, how could Peter Cooper, that walking encyclopedia of quotations, manage that sort of performance in a year when markets were all over the place?

The secret lies in a huge rise in performance fees - up from $5 million to $15 million - while management fees slid from $24 million to $19 million.

Cooper manages wholesale funds and trusts for institutional and high-net-worth folk and he's got about $3 billion under management. So what sort of performance leads to those sorts of rewards? Well, Cooper's little empire doesn't give a great deal away but some flavour of how one arm travelled is provided by its CI Australian Equities Fund.

Performance fees flowing from the fund jumped from $2.1 million to $5.8 million, while management fees fell from $7.6 million to $5.9 million. The fund returned minus 18.25 per cent, according to its June report, compared with minus 20.14 per cent for the relevant benchmark.

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In the words of the fund management game, the so-called ''value adding" was a positive 1.89 per cent.

No matter what you make of it, it's big money for the team, and Cooper owns the lion's share of it. Dividends doubled to $16 million, employee costs took $7 million, while key management folk collected nearly $4 million.

Meanwhile, Cooper says he's yet to see much recovery in Western world earnings and noted that the local market was now trading at close to record high earnings multiples compared with the rest of the world. He's cautious in the short term but long term he expects equities to deliver real positive returns as Australia reclaims its title as the ''lucky country''.

Globe 'focused'

PAUL Isherwood doesn't mind reminding shareholders in Globe International of the glory days after the shares listed eight years ago.

At the clothing group's annual meeting, he told shareholders that "our shares were quickly bid to an unsustainable price, which, as I recall, at one stage represented a price earnings multiple of some 55 times!".

He said the 2002 acquisition of the Kubic group in the US was an untimely move at the wrong point in the cycle and "at a time when we were still feeling our way as a listed company with pretty meagre resources".

Against a background of June-year earnings consisting of a $9.3 million first-half loss and a $400,000 second-half profit, Globe was now a far better focused business, Isherwood said.

And he's put his money where his mouth is; he's just increased his stake by 58 per cent with the purchase of 115,000 shares at 45 cents apiece - 47 times second-half earnings!

Flawed model?

GOSSIP in academic circles at the University of Melbourne continues about how long the so-called ''Melbourne Model'' can survive. Indeed some critics claim it's on the verge of collapse.

The model requires students to do another course before doing, say, law. Other law schools were expected to follow like sheep. The problem was they didn't, and the result was an enrolments war among the law schools. And just the other day, the Melbourne law school's dean, Professor James Hathaway, called it a day, saying he wanted to return to full-time academic life.

Vice-chancellor Glyn Davis circulated a glowing tribute to the professor, noting he had joined at the start of last year "to lead the most ambitious change in the history of Australian legal education - the establishment of this country's first all-graduate law program, flagship of the university's Melbourne Model transition".

Davis went on to say that the Melbourne degree was attracting extraordinarily gifted students.

A leading Melbourne lawyer commented: "That's probably right, except that it's not attracting very many of the extraordinarily gifted students; they're going to Monash.

"It must have seemed like a good idea at the time but the Melbourne Model requiring that you must do another degree first is emerging as a commercial disaster."